ILLICIT ECONOMICS AND TERRORISM: THE ROLE OF INFORMAL TRADE AND SMUGGLING IN FINANCING TERRORIST ACTIVITIES IN NORTHEAST NIGERIA

This thesis examines the relationship between insurgent-linked illicit finance in Nigeria, persistent financial exclusion, and the limits of existing counterterrorist financing responses. It argues that terrorist financing is sustained not by regulatory absence, but by structural reliance on cash and informal financial practices, especially in rural and conflict affected areas where exclusion is deepest and insurgent influence is strongest. Drawing on comparative analysis of mobile money adoption and informal value transfer enforcement in Nigeria, Kenya, and Pakistan, it shows that formalization succeeds only when it aligns with everyday transaction practices. Financial inclusion becomes security relevant when formal systems are usable, reliable, and trusted enough to replace informal finance, while enforcement becomes effective when it consistently converts traceability into sanctions. The thesis advances a framework in which substitution and deterrence jointly contract informality and expand traceability. It recommends establishing a Counter Terrorist Finance Fusion and Enforcement Task Force to integrate financial and security intelligence, and to conduct targeted and lawful disruption operations. It also recommends mandating government welfare payments through mobile money to normalize formal financial usage and expand auditable transaction records. Together, these measures offer a pathway to align financial inclusion with counterterrorist-financing objectives in Nigeria.

Grantor dc:publisher

Monterey, CA; Naval Postgraduate School

Year dc:date.issued

2026

Author dc:creator

• Olayiwola, Oluwaseun B.

Advisors dc:contributor.advisor

• Piombo, Jessica R.
• Dahl, Erik J.

Statement dc:rights

• Copyright is reserved by the copyright owner.

Handle dc:identifier.uri

https://hdl.handle.net/10945/75020

OAI identifier oai:identifier

oai:calhoun.nps.edu:10945/75020